Estimation of operational efficiency and its determinants using DEA: The case of Indian coal-fired power plants
International Journal of Energy Sector Management
ISSN: 1750-6220
Article publication date: 18 November 2013
Abstract
Purpose
The purpose of this study is to benchmark the performance of state-owned coal-fired power plants (CFPPs) and test whether plant-specific knowledge in terms of quality of coal, size, age and make of plant contribute to an improvement in plant efficiency.
Design/methodology/approach
The methodology that is utilized in the study follows a nonparametric approach of data envelopment analysis (DEA) with sensitivity analysis and Tobit regression model. The input-oriented DEA models are applied to evaluate the overall, pure technical and scale efficiencies of the CFPPs. Further, slack analysis is conducted to identify modes to improve the efficiency of the inefficient plants. Sensitivity analysis based on peer count and the removal of variables is carried out to identify the benchmark power plant. Through Tobit and bootstrap-truncated regression model, the paper investigates whether a plant's specific knowledge influences its efficiency.
Findings
The DEA analysis demonstrates that nine plants are technically purely efficient.The slack analysis reveals that reducing the consumption of oil is the most effective way to improve the efficiency of inefficient plants. Mattur plant is the benchmark for most of the inefficient plants. Regression result suggests that quality of coal and size of plant significantly affect the inefficiency of the sample plants. Bharat Heavy Electrical Limited MAKE plant achieved higher efficiency in comparison to mixed MAKE.
Originality/value
This study is one of the few published studies that benchmark the performance of state-owned CFPPs. This research carried out taking some new uncontrollable parameters of power plant utilities of India. Research work also identifies the possible causes of inefficiency and provides measures to improve the efficiency of the inefficient power plant.
Keywords
Acknowledgements
The authors are highly thankful to reviewers for their fruitful comments and suggestions that helped the authors to improve the earlier versions of the paper.
Citation
Kumar Singh, S. and Kumar Bajpai, V. (2013), "Estimation of operational efficiency and its determinants using DEA: The case of Indian coal-fired power plants", International Journal of Energy Sector Management, Vol. 7 No. 4, pp. 409-429. https://doi.org/10.1108/IJESM-03-2013-0009
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited